Thursday, April 24, 2014

Reshoring Trend

Firms look to shorten supply chains as global
protectionism is on the rise.As discussed in this space before, “reshoring”
seems to be picking up steam.We’re seeing a few bumps
on the way to a global village where “the world is flat,” in Thomas Friedman’s
memorable phrase. Economists and trade experts are beginning to talk about “a
new era of deglobalization, in during which countries turn inward,” asserted
Rana Foroohar in Time magazine.

If globalization is defined as the free movement of goods, people and money across
borders, that movement has become less free, and the increasing tension between
NATO and a resurgent Russia that began in Crimea will only exacerbate the
trend. Protectionism, trade barriers and increasingly fragmented trading blocs
are on the rise, causing producers to rethink their strategies for sourcing
their goods.

“Companies are looking at their extended value chains, supply chains, and
deciding whether they want to move some production back to their home country,”
said U.S. Trade Representative Michael Froman at a recent Washington economic
summit. In a study by the Boston Consulting Group, 21 percent of all
manufacturing firms in this country with sales of $1 billion or more said they
are actively reshoring, and 54 percent said they are considering it.

After nearly five years of recovery, the U.S. Trade deficit isn’t growing but
shrinking, down by approximately 12 percent from 2012 to 2013. Over this
period, global trade growth was lower than global GDP growth, the first time
that has been the case since World War II.

Protectionism is on the rise, said Roberto Azavedo, director general of the
World Trade Organization, “becoming more sophisticated, more complex, more
difficult to detect.” It’s impossible to know what barriers will be erected in
the future, and individual companies can become pawns in this high-stakes
international chess game. For those with supply chains spanning international
borders, reshoring can be reassuring.

About TOTALogistix

TOTALogistix is a privately held corporation headquartered in Sparta, NJ. We helped define the Third Party Logistics Industry in 1991. Today we provide a wide spectrum of transportation and related supply chain management services to manufacturers, retailers and distributors throughout North America.
In our 20+ years in business, we’ve saved money for nine out of ten companies whose transportation we’ve analyzed. We’re confident we can do the same for you. Improving logistics performance starts here.